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Car market: in January-May 2024, the share of credit sales increased to 15%

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In January-May 2024, compared to the same period last year, the share of credit sales increased from 11% to 15% of total sales of new cars, which is more than 2 thousand units. These data were provided by Serhii Kiporenko, Head of Car Lending at GLOBUS BANK.


According to him, on average, in January-May 2024, the volume of car sales on credit amounted to 900 units per month.
"The positive dynamics of car lending became possible due to a significant reduction in the NBU discount rate to 13.5%, which allows us to attract cheaper resources for the development of lending. In addition, car dealers now have the opportunity to offer a wider variety of cars in different configurations and in sufficient quantities, and financial institutions have started to actively develop their own loan products to attract more potential customers,’ the expert said.
Sergiy Kiporenko pointed out that as of the beginning of June, the most popular loan programmes were those with an interest rate of 0.01% for 1-3 years with a down payment of 40% to 60% of the cost of a new car. In addition, customers are interested in the insurance rate under the CASCO insurance contract and the possibility of including the insurance payment under the insurance contract for the first year of lending in the loan body.
In turn, when approving a loan, banking institutions pay attention to:

1) the down payment on the loan;

2) the borrower's credit history;

3) whether the client (spouse) has their own property (real estate or a car).
According to the expert, since the beginning of 2024, the priorities and preferences of individuals in terms of purchasing a car on credit have remained unchanged. Thus, the 5 most popular ‘credit’ car brands and models in the price range of $16-45 thousand are as follows: TOYOTA, RENAULT, VOLKSWAGEN, SKODA, BMW. Legal entities have slightly different priorities. Thus, the most popular cars on credit are RENAULT, TOYOTA, VOLKSWAGEN, PEUGEOT and VOLKSWAGEN. In the segment of low-cost cars in the price range of $10-18 thousand, the customer preference rating is as follows: RENAULT, BYD, CITROEN, CHERY, GEELY, FIAT, JAC and GREAT WALL. And the popularity rating of premium cars worth $80-100 thousand and above is as follows: BMW, LEXUS, MERCEDES-BENZ, AUDI, LAND ROVER, etc.
"In the second half of the year, a slight decline in credit sales of new cars is expected: compared to January-May, the decline may be at the level of 10-20% (the expected number of sales of new cars on credit may be on average 700 units per month). However, buyers‘ priorities in terms of price and car brands are unlikely to change,’ predicts Sergii Kiporenko.
The expert also spoke about the ratio of car purchases through leasing and bank lending. According to him, both leasing and bank lending are developing quite actively, with a much larger number of leasing companies compared to banking institutions lending for car purchases.
In the first 5 months of 2024, the share of new car sales by leasing companies was 30%, while banking institutions accounted for up to 70% of new car sales. The situation is the opposite in the used car market: 70% of cars are sold by leasing companies and only 30% through banks.
The banker believes that this ratio will continue in the future, as the used car market is many times larger than the new car market. In addition, the policy of leasing companies is more loyal, both to the condition of the used car and to the list of requirements for customers. At the same time, banks are more cautious about lending to the used car segment, given the number of risks involved: they tend to lend when the seller of a used car is a legal entity, such as a car dealership. In addition, the sale of such cars is usually accompanied by notarisation of pledge agreements, which is an additional cost for the borrower.
"At present, banks are ready to finance the purchase of cars that will be less than 10-12 years old at the end of the loan term, with a minimum down payment of 20% of the cost and without the mandatory notarisation of pledge agreements. In addition, some banks are ready to finance a client when the seller is not only a legal entity but also an individual,’ the expert elaborated.
As for used car lending, according to his data, the most popular car brands over the past 5 months have been: VOLKSWAGEN, TOYOTA, HYUNDAI and AUDI.
According to the expert, in the second half of 2024, the activity of buyers intending to purchase new cars on credit may decline. At the same time, loan rates are unlikely to change significantly: depending on the down payment and loan maturity, they will range from 0.01% to 15% per annum.
"The war, the gradual projected devaluation of the hryvnia and the potential increase in the cost of new cars may deter potential customers from visiting car dealerships. However, the market is unlikely to sag significantly. Demand will continue to be for cars with zero interest rates for short terms (1-2 years) and with large down payments (40-50-60% of the total cost of the vehicle), as it has been for the past 5 months. The main factors that may affect the revision of lending rates and thus ‘stir up’ demand may be a further reduction in the NBU discount rate, the entry of new players with competitive conditions into the bank lending market. And finally, the ‘calming down’ of hostilities or the end of the war,’ summed up Sergii Kiporenko.

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The mission of the Association of Ukrainian Banks is to support the development of the national banking system. The AUB cooperates with the Verkhovna Rada of Ukraine on improving the legislation governing banking activities, and interacts with the National Bank of Ukraine on regulatory support for the functioning of banks and non-bank financial institutions. The CBA takes care of the professional development of bank employees, expands international relations with associations and banking institutions of other countries.



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